Which of the following is true about credit cards? (1 point)
• They are issued by networks such as Visa.
• They usually charge a lower interest rate than debit cards.
• When you use one, the money is taken directly from your bank account.
• You can run up huge debts if you don't pay the balance off quickly.
The option "You can run up huge debts if you don't pay the balance off quickly" is true about credit cards.
The true statement about credit cards from the options provided is:
• They are issued by networks such as Visa.
To determine which of the given statements about credit cards is true, let's evaluate each option:
1. They are issued by networks such as Visa.
This statement is true. Credit cards are commonly issued by financial institutions in association with payment networks like Visa, Mastercard, American Express, etc. These networks facilitate transactions and ensure acceptance at various merchants.
2. They usually charge a lower interest rate than debit cards.
This statement is incorrect. Credit cards generally have higher interest rates compared to debit cards. The borrowing nature of credit cards means that interest is charged on the outstanding balance if it is not paid in full by the due date.
3. When you use one, the money is taken directly from your bank account.
This statement is false. Unlike debit cards, credit cards do not directly deduct money from your bank account at the time of purchase. Instead, the issuer of the credit card pays the merchant on your behalf, and you later repay the issued amount to the credit card company.
4. You can run up huge debts if you don't pay the balance off quickly.
This statement is true. If you do not pay off your credit card balance in full or make only minimum payments, you may accumulate interest charges. Failing to manage your credit card responsibly can result in significant debt if left unpaid over time.
In summary, the first and fourth statements are true about credit cards.